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San Joaquin Valley farms are laying off workers and letting fields lie fallow as their water ration falls.

Reporting from Mendota, Calif. -- Water built the semi-arid San Joaquin Valley into an agricultural powerhouse. Drought and irrigation battles now threaten to turn huge swaths of it into a dust bowl.

Farmers have idled half a million acres of once-productive ground and are laying off legions of farmhands. That's sending joblessness soaring in a region already plagued by chronic poverty.

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Water scarcity looms as a major challenge to California's $37-billion agricultural industry, which has long relied on imported water to bloom. The consequences of closing the spigot are already evident here in rural Fresno County, about 230 miles north of Los Angeles. Lost farm revenue will top $900 million in the San Joaquin Valley this year, said UC Davis economist Richard Howitt, who estimates that water woes will cost the recession-battered region an additional 30,000 jobs in 2009.